Lufthansa Ditches First Class in A Third of Fleet

[edited] SM, this is no surprise and has been trailed before. Indeed, Lufthansa are finding it particularly difficult to compete on some Asian routes and are looking to substitute low cost alternatives for their mainline services.

There is plenty new, as this announcement is far more drastic than the limited removal of F from a single aircraft type.

It would help if journalists and airlines would be consistent in their use of the phrase “lie flat” = wedgy bed vs. “fully flat” – horizontal.

Unfortunately, no doubt with some calculation, the two have become blurred.

Lufthansa is not one of my favourite airlines, but they are strategic in intent and decisive.

If the board decide they have made a decision that is no longer valid, they will take action to fix that, regardless of the bad press.

Likewise, if F no longer works on a route, it will go, which is a shame as LH do F well.

Strategic management consists of many attributes, but recognising changes in the external environment is a keystone and this latest news is an example of this in action.

LH Group thinks a lot further ahead than this or next year’s results and is fortunate enough to be based in a country where this longer term thinking is well regarded and accepted.

Taking a slightly different angle for a second, with Lufthansa bringing in premium economy next year, has anyone else wondered that from a product perspective, we are simply where we were about 10 years ago?

I did a lot of flying on LH at the start of my career and their C seat was a cradle type seat with 38 – 40 inches of pitch, probably what their new Y+ will be. At the time, their first class used to be a lie flat seat in a 2 – 1 – 2 configuration on the Airbus A330’s / 40’s. So in conclusion, First has largely disappeared, business is offering what first used to, premium economy business and so on. The same story is there for most other legacy carriers. products have got better, but in effect been ‘re-named’ to a lower cabin.

What we have removed is the word ‘First’ from the product offering, which in a post recession austere world is deemed unacceptable to many companies and certainly in the public sector.

“With the advance in Business class cabins in the last decade it is no wonder that First Class has less appeal.”

I agree, Tim.

I spent 6 hours in a J class seat on an EK 77W yesterday and when the plane stopped to drop off/pick up in Larnaca, had a look at first. Yes it was 2 x 2 x 2, not 2 x 3 x 2 and yes the seats had mini bars for soft drinks (but I had a call bell and a responsive cabin crew team) and the TV screen was larger.

But worth the price differential? Not a chance; the angled seat on these aircraft is so shallowy angled that it feels very close to lie flat and is comfortable to sleep on – that’s why I pay for a premium cabin.

Are we missing the point though, Is having a F class a key enabler to filling the business cabin and driving loyalty? Being able to use miles for F class tickets is a big reason I personally choose BA over Virgin for example.

@ FormerlyDoS – 07/10/2013 17:16 GMT

LH Group thinks a lot further ahead than this or next year’s results and is fortunate enough to be based in a country where this longer term thinking is well regarded and accepted.

Indeed. From the “Economist” dated 5 October 2013 “The profits prophet” is a review of a book written by the contrarian economist Andrew Smithers seeking to explain why, when corporate profits in the US/UK are so high, investment is so low and productivity falling.

READS:

PROFITS have been booming in America, reaching the highest proportion of GDP since the second world war. Given such buoyant conditions, you might imagine that businesses are investing like crazy to take advantage of all those great opportunities.

Not a bit of it. The ratio of business investment to GDP has picked up since the depths of the financial crisis, but is still close to the lows of previous cycles. Instead, businesses are handing cash back to shareholders, a tactic once reserved for executives who had run out of ideas. In 2011 the value of American share buy-backs was equal to 2.7% of GDP; in Britain, the figure was 3.1%.

In the early 1970s American companies invested 15 times as much cash as they distributed to shareholders; in recent years the ratio has dropped back to below two. What has driven this change? In his new book, “The Road to Recovery: How and Why Economic Policy Must Change”, Andrew Smithers, an economist, argues that the main cause has been management incentives.

Executives are now paid largely in the form of bonuses rather than salary. These bonuses are often tied to the share price, which in turn depends on the ability of the company to meet its quarterly earnings-per-share target. Buy-backs tend to boost earnings per share; investment plans may dent them. Smithers writes that “The result of the increased importance of bonuses and the use of these measures of performance is that managements are now less inclined to take short-term risks, such as cutting profit margins, and more inclined to take the longer-term risks involved in lower investment and the possible loss of market share that will result from higher margins.”…. ENDS

It helps explain why Germany will continue to pull ahead of the UK in its economic performance in future years and why the question of EU membership is an utter irrelevance. Germany thrives inside the EU because of the way it organises itself and because there is a broadly common economic philosophy which is accepted across the spectrum.

Oh and one point regarding the OP, LH will NOT be installing Premium economy; they have made it clear that it will be a two-class only configuration: Business and Economy classes